Question No 18 Chapter No 8 - T.S. Grewal 11 Class

Question No 18 Chapter No 8

On 1st April,2018, the position of Rahman was as follows: Cash in Hand Rs 11,200, Cash at bank Rs 2,57,600; Bills Receivable Rs 68,800: Jai Ram (Dr.) Rs 16,000; Ram Kumar (Dr.) Rs. 48090; Office Furniture Rs 52,800; Stock in trade Rs 4,16,000; Doulat Ram(Cr.) Rs 1,74,720, Hari Ram (Cr.) Rs 2,16,960; Bills Payable Rs 80,000. What was the amount of capital of Rahman on that date? Show the Journal entry to open his books.

Solution of Question No 18 Chapter No 8: –

So to solve this question first we have to prepare the working Note shown as below:

To Calculate the amount of capital we should use the following formula.

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“Capital = Total Assets – Total Liabilities”

To apply this formula we have to recognize the assets and liabilities accounts first. This is shown below: –

Name of Accounts	Type of Account	Debit/ Credit	Reason of Debit/Credit
Cash A/c	Asset	Debit	All assets always have a debit balance.
Cash at Bank A/c	Asset	Debit	All assets always have a debit balance
Bills Receivable A/c	Asset	Debit	All assets always have a debit balance
Jai Ram A/c	Asset	Debit	Any account which has a debit balance will be treated as an Asset.
Ram Kumar A/c	Asset	Debit	Any account which has a debit balance will be treated as an Asset.
Office Furniture A/c	Asset	Debit	All assets always have a debit balance
Stock in Trade A/c	Asset	Debit	All assets always have a debit balance
Doulat Ram A/c	liability	Credit	Any account which has a credit balance will be treated as a Liability.
Hari Ram A/c	liability	Credit	Any account which has a credit balance will be treated as a Liability.
Bills Payable A/c	liability	Credit	All Liabilities are always had a Credit balance

Note: You did not need to prepare above table in the exam, Because this is just for your understanding.

Total Assets = 11200+257600+68800+16000+48080+52800+416000

Total Assets = 8,70,480/-

Total Liabilities = 174720+216960+80000

Total Liabilities = 4,71,680/-

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So,

Capital = 8,70,480 – 4,71,680

Capital = 3,98,800/- Ans.

Now Post this in the Journal daybook: –

In the Books of Rahman

Date	Particulars		L.F.	Debit	Credit
1st April 2018	Cash A/c	Dr.		11,200
1st April 2018	Cash at Bak A/c	Dr.		2,57,600
	Bills Receivable A/c	Dr.		68,800
	Jai Ram A/c	Dr.		16,000
	Ram Kumar A/c	Dr.		48,080
	Office Furniture A/c	Dr.		52,800
	Stock in Trade A/c	Dr.		4,16,000
	To Doulat Ram A/c				1,74,720
	To Hari Ram A/c				2,16,960
	To Bills Payable A/c				80,000
	To Capital A/c (B.Fig)				3,98,800
	(Being opening balances of last year brought forward in the current year )